Chrysler to drop new sedan, cites fuel curb-report

NEW YORK (Reuters) - The Chrysler Group is abandoning a plan to build a new luxury sedan, citing fuel regulations currently on the table in Washington that could push U.S. automakers to increase vehicle fuel mileage, the New York Times reported on Wednesday.

Chrysler is the first carmaker to announce a change in production plans related to the push in Congress to require that vehicles sold in the U.S. consume less gasoline, the Times report said.

A Chrysler spokesperson told the Times the environment was no longer favorable for a luxury Imperial model.

"We decided in an era of $3 gas and more regulations headed this way that it didn't amount to a good business case -- a profitable business case," Ed Saenz was quoted as saying, adding that the decision was reached by the automaker three weeks ago and was not related to the group's impending sale to Cerberus Capital Management.

A spokesperson for Chrysler could not immediately be reached for comment.